Walmart Q4 Earnings: The Growth of Retail Sales Might Shrink, Watched Out Valuation Risks

TradingKeyFeb 21, 2025 7:09 AM

TradingKey - Walmart (WMT) Q4 earnings report and next year guidance review:

1、Q4 Revenue: Revenue for the fourth quarter was $180.6 billion, exceeding previous market expectations by $1.6 billion, a growth of 4.2%. Non-GAAP EPS was $0.66, slightly above market expectations. However, due to the lower-than-expected guidance for 2026, the stock price fell by 6.54% to $93.28. Walmart's revenue maintained good growth mainly due to diversified income sources, seasonal sales opportunities, improved delivery speed and services, and growth in Sam's Club membership income.

2、Q4 Highlights: Online revenue grew by 16%, significantly contributed by Sam's Club membership income. This is also related to the company's increased capital expenditure strategy in recent years, especially in continuous capital investment in product design and model optimization. Online sales, excluding fuel sales (Ex fuel), saw a year-on-year increase of about 2% in both price and volume. The share of online purchases by high-income households is also increasing. In terms of pricing, inflation factors reflected a year-on-year increase of approximately 70 basis points. The share of customers choosing expedited delivery is also growing, indicating that the large retailer's delivery services and customer convenience have further improved, thereby promoting business performance.

3、Advertising Revenue Growth: Advertising revenue grew by 24%. This business refers to comprehensive digital advertising revenue on Walmart's website, app, physical stores, and related channels. After acquiring VIZIO at the end of 2024, it is expected that Walmart's advertising revenue will further increase this year through VIZIO's smart TVs and system channels.

4、2026 Fiscal Year Outlook: The midpoint of revenue guidance is below market expectations. Despite a 13% increase in stock dividends, the market stock price still defensively fell yesterday. From the perspective of the overall retail industry, although the announced holiday consumption growth rate at the end of 2024 was 3.8%, higher than 3.1% in 2023, the actual overall retail industry consumption trend is showing a phased deceleration. Walmart will inevitably be affected by the overall negative impact of the industry, including competitive pressures from Amazon and Costco, which need continuous attention. The company's stock price rose by 80% in 2024, recently reaching the highest position in 52 weeks (PE over 40X). We believe the valuation risk is currently quite high.

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